Asia Pacific First Quarter 2016 Office Overview

KEY TAKEAWAYS

First quarter 2016 GDP numbers indicate that the Asia Pacific economy continued on a growth path with the Chinese economy growing 6.7% on a year-over-year basis in the first quarter, its weakest appreciation since the financial crisis but within the target of 6.5% to 7.0% for 2016. Consumer price inflation continued to remain manageable in most parts of the region, albeit Japan is once again struggling with deflationary pressures.

Leasing activity was generally healthy in China, Australia, India and Southeast Asia with Singapore as exception.

Meanwhile, the regulatory crackdown on peer-to-peer (P2P) lending firms in China will mainly impact its tier-2 cities. Emerging Southeast Asia countries are expected to be one of the biggest beneficiaries from the formation of AEC and TPP, which will bolster office demand in these markets.

Availabilities in gateway cities remained tight especially in Tokyo; even pre-leasing in upcoming projects remained robust. Meanwhile, emerging markets were, in general, tilted in the favor of occupiers, with new supply raising availabilities in many cities.

With an improving leasing market, incentives have started to recede in Sydney and Melbourne. Likewise, rents continued to move up in Tokyo, Hong Kong’s Greater Central and some emerging markets such as Manila, Bengaluru and Hyderabad on the back of strong occupier demand. In contrast, competition amonlandlords in Singapore has pushed rents down by 14% annually.

The co-working concept has landed in Asia and expanding in the gateway cities of Singapore, Shanghai, Sydney and Melbourne. Providers like WeWork are also exploring India’s metropolitan cities for expansion.